UK - Cordea Savills claims to have lined up pension fund investment for its prime London residential development fund, having already secured £25m (€31m) from a private bank. The fund, which announced its first close last week and is targeting £150m for its second closing, was set up to capitalise on demand from international investors for prime residential property in the city, combined with reduced bank funding for development projects with planning consent. Nick Hayward, director of institutional business at Cordea Savills, said any hesitancy on the part of pension funds in committing capital had more to do with the state of the wider capital raising market than the UK residential sector itself. "It reflects more appetite among pension funds for second and third closings than for first closings," he said. "Institutions in today's markets want to invest in funds that have already launched." Cordea Savills has already secured a capital commitment from an unnamed private bank for a second close plan scheduled for August. A third close is expected at the end of the year. "When we first started holding discussions with potential investors, both private banks and pension funds were going to invest at the same time," said Hayward. "But it's easier for private banks to corral high-net-worth investors." He said the four-year fund - with a two-year optional extension - represented "a play on global growth", with pricing for London residential forecast to rise still further on the back of global demand for 'safe haven' assets. "Investors [in the fund] are buying into the market at a discount, and getting opportunistic returns," said Hayward. The fund targets a return of between 18-20%. Although the fund manager is looking at several development projects in the capital, Hayward acknowledged there was insufficient supply for a global opportunistic fund. "We've set the target size of the fund in line with the opportunities we expect for it," he said. In separate news, the real estate subsidiary of the Qatari Investment Authority, a sovereign wealth fund, has acquired the first asset in its 60:40 central London residential joint venture with UK REIT London & Stamford. The £147m, 149-unit acquisition is Qatari Diar's third within the prime Grosvenor Waterside development. Qatari Diar has already invested significantly via joint ventures in large-scale UK residential projects, including Chelsea Barracks and the Olympic East Village.

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